When a firm moves from straight-time pay to commission orpiece-rate pay, the productivity of a firm's employees may A. increase as less productive employees leave and those who remain have an incentive to sell more. B. decrease as less productive employees leave and those who remain have no incentive to sell more. C. be affected as the employees assume lower risk for higher pay. D. fall as they assume more risk but and have no incentive to sell more.

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter20: The Problem Of Adverse Selection Moral Hazard
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When a firm moves from straight-time pay to commission orpiece-rate pay,
the productivity of a firm's employees may
A.
increase as less productive employees leave and those who remain have an
incentive to sell more.
B.
decrease as less productive employees leave and those who remain have no
incentive to sell more.
C.
be affected as the employees assume lower risk for higher pay.
D.
fall as they assume more risk but and have no incentive to sell more.
Transcribed Image Text:When a firm moves from straight-time pay to commission orpiece-rate pay, the productivity of a firm's employees may A. increase as less productive employees leave and those who remain have an incentive to sell more. B. decrease as less productive employees leave and those who remain have no incentive to sell more. C. be affected as the employees assume lower risk for higher pay. D. fall as they assume more risk but and have no incentive to sell more.
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